Title: Kao Profit Down

Kao Corp., Japan's largest household products maker, announced its first fall in recurring profit in 25 years reportedly because of its acquisition of Kanebo Cosmetics and forecast lower-than-expected profit this year. Sales of its Asience hair care and Biore U body care products were solid, but falling prices of toiletries in the domestic market and rising raw materials costs also hurt profits, it said, according to reports.

Heavy amortization costs related to Kanebo will lead to a fall in recurring profit but the figure is expected to rise in the 2007/-8 business year, Kao President Motoki Ozaki said in reports. For the year ended March 31, Kao's group recurring profit fell 2.7 percent to 121.96 billion yen (US$1.1 billion), below a consensus projection of 124 billion yen. Sales grew 3.7 percent to 971 billion yen backed by solid overseas sales of skin care products and chemical products, but amortization of intellectual property rights and other charges related to Kanebo Cosmetics, reportedly amounting to nearly 3 billion yen, weighed on profits, said reports. A continued drop in prices of dish washing detergent and diapers and slack sales of its Healthya green tea also had a negative impact, the company added. Net profit also fell slightly, though it was cushioned by a lower tax rate.